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Rich people ask themselves: What must we lose?

Even before Donald J. Trump defied the odds and was elected the 45th president of the United States, wealthy investors were feeling uneasy about the level of uncertainty in the global economy.

While some people are optimistic that a Trump administration could mean tax breaks, less business regulation and other benefits to the wealthy — and even the stock market eventually rose on the news — the truth is, no one knows for sure what the next months or years will bring.

Michael W. Sonnenfeldt, a New Yorker who made a fortune in real estate and banking, captured the level of uncertainty lately among the world’s wealthiest investors:

“I can’t compare this time to World War II,” he said. “But the combination of potential interest rate shocks and a China implosion and the geopolitical situations with Russia, China, Iran, the Middle East, ISIS, and the difficult political situation in the U.S. with the most challenging, strangest presidential election we’ve had in our lifetime — it all adds up to many generic concerns.”

His list of woes has been common among wealthy investors in the United States. Tony Roth, the chief investment officer at the Wilmington Trust Corporation, has begun to include models for how much a client can lose in the firm’s new investment pitches.

“What we’ve done is put a new emphasis on risk, which is what we call ‘drawdown exposure,’” Mr. Roth said. “It’s not volatility. It’s, if we have an event, how much could you lose?”

He said many clients had been cautious for several years, when markets performed well and they missed out. Now they want to take on more risk to increase their returns, yet they fear having another loss as in 2008.

“Clients are saying, ‘We have goals and we may need to take more risk — what does that mean to me?’” Mr. Roth said. “If you tell me I could lose 25 percent to 50 percent of my portfolio, that means something to me.”

Photo

The New York Stock Exchange in early November. Wealthy investors are feeling uneasy about the level of uncertainty in the global economy. Credit Benjamin Norman for The New York Times
Rebecca Patterson, chief investment officer at Bessemer Trust, said she wrote a recent investment paper directed at clients who were overly fearful of a catastrophic event in the markets. “A larger number of clients are seeing the glass as unusually empty at this point,” she said.

“There’s a lot of uncertainty out there,” she added. “But there are also a lot of things going well — technology, biopharmaceuticals, people’s quality of life. Even with all these good things happening, that’s not where the conversation is going.”

Of course, it is easy to be pessimistic after a year of noisy election campaigns, Britain’s “Brexit” vote to leave the European Union, a slowdown in China, saber-rattling and suspected digital snooping by Russia, and the slowing of Brazil’s economic engine by political problems and the Zika virus.

“The hard part is getting past that emotion,” said Judith B. Ward, senior financial planner at T. Rowe Price. “Clients, when they call us, they just want reassurance to stay the course. One of the things we focus on a lot is to have that long-term perspective to weather some of the storms that we might see.”

Today, Mr. Sonnenfeldt is the chairman of Tiger 21, an investment club he founded 18 years ago that has 447 members with an average wealth of $100 million. In that role, he likes to poll his fellow millionaires and billionaires on what concerns them and what actions they take to address those worries.

Right now, he said, members are taking money out of the public markets and investing more in private equity deals, which are far less liquid but offer higher returns for people who can afford to be patient. They have minimized their personal debt, gotten out of hedge funds and invested in hard assets, like real estate.

“It’s back to basics on the whole,” he said. “It’s less overseas adventures and more back to basics with American businesses that sell real products and services. Real estate is our No. 1 overall allocation.”

“There’s a general wariness about markets because there are different measures by which you can determine if the market is overpriced,” he added. His group think

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